FSH Allows Software Licences to Be Resold

On request of the German Federal Supreme Court, on Tuesday, the European Court of Justice (ECJ) in Luxembourg decided that used software licences may be generally resold and followed the assessment of the Advocate-General Yves Bot as expected. This decision also refers to Download Software.

Hamburg, 3rd July 2012. A bombshell. As a result, this long awaited judgement has fair-reaching consequences for all software manufacturers. A longstanding dispute about the continued sale of used software comes to a clear end, to the benefit of the software sector. As a result, the previous legal uncertainty is at an end. In the current case, the software developer Oracle prosecuted the Munich-based firm Usedsoft, as it saw a violation of its copyrights.

With the sale of the software, the rights of the manufacturer for the affected copy were exhausted, explained the Luxembourg judge when passing judgement. A differentiation between the CD-ROM and DVD on the one hand, as well as a ‘non-physical’ copy from the internet on the other hand, did not take place. Up to now, a distinction was drawn between a data carrier that has been bought, and a download that has been paid for. Apart from that, according to the decision, the manufacturer can “control programs that have been downloaded from the internet and request another fee for every resale, although he/she was already able to achieve appropriate remuneration when initially selling the affected copy”.

The permanent usage right that is associated with acquiring the concluded contract, is reportedly not bound to the initial buyer. He/she is the sole owner and may resell it, but then of course not continue to use it him/herself. In addition, when passing judgement, the judge ruled as follows “If the copyright holder namely provides his/her customer with a copy – physical or non-physical – and concludes a contract subject to payment of a fee, due to which the customer receives unlimited right of use on this copy, then he sells this copy to the customer and thereby exhausts his exclusive right of use”.

Updates when reselling used software remain unaffected. According to this, the one who acquired the licence used, also has the right on the current version of the respective program. The ruling went on, “Even if the maintenance contract is temporary, the functions in particular that have been improved, changed or added to due to such a contract are part of the copy that was originally downloaded and can be used by the customer with any time limit”.

As software will increasingly be loaded from the internet via the manufacturer in the future, this verdict has enormous influence on the software market. In the USA, downloads make up almost half of turnover for computers and video games. To what extent the software market for operating systems and Office applications follows suit is only a matter of time. “The verdict confirms our philosophy of free movement of goods for used software”, explained Boris Vöge, PREO Software AG Chairman. It should “continue to be sold like any other product.” With regards to software sold electronically, the decision shows a “clear adjustment of copyright law to the parameters of the digital society”.